Whistle blower

Under the Texas Whistleblower Act, a person who works for a governmental entity and who reports violations of law is protected. Chad Carter worked for the City of Abilene as an engineer. He complained to his superiors that the city had hired contractors who were using unlicensed engineers. Using unlicensed engineers violates the Texas Engineering Practice Act. Mr. Carter was soon afterward fired. He sued under the Texas Whistleblower Act. The City responded with three different pleas to the jurisdiction. A peal to the jurisdiction is equivalent to a motion to dismiss for failure to state a claim. The plaintiff said he made three reports of violation of law: to the city engineer, the city attorney and to the Texas Board of Professional Engineers. The TWA requires that a person make the report to a law enforcement official with responsibility for the violation.

The trial court denied the plea to jurisdiction. The city appealed, saying Mr. Carter did not report the violation of the Engineering Practice Act to an appropriate law enforcement agency. The city argued that a complaint to the Texas Board of Professional Engineers was not the appropriate law enforcement agency. But, the plaintiff pointed to specific provisions of the Texas Occupation Code providing that the Board does enforce the Engineering Practice Act. Since this is a plea to the jurisdiction, the court is required to accept the plaintiff’s allegations as true. But, in this instance, the court can simply look at the statute and see if the Occupations Code says what the employee says it says. The decision does not explain why the city would offer an argument that can be verified so easily. But, in making an argument easily shown to be false, the city impeaches itself.

According to the plaintiff, the Board looked into the matter and did investigate his complaint. It reached an agreement with the City of Abilene regarding the complaint. So, the Eastland Court of Appeals rejected the employer’s appeal. See the decision in City of Abilene v. Carter, No. 11-15-00121 (Tex.App. Eastland 8/10/2017) here. Indeed, one must conclude the city’s appeal was frivolous.

Another local manager has sued Wells Fargo saying she was fired due to the oppressive and fraudulent sales tactics employed by the company. Rachael DeBoy of Cibolo sued the company accusing them of fraud, breach of contract, quantum meruit (i.e., alleging the company did not pay what was owed), and for wrongful termination. In the Petition filed under DeBoy v. Wells Fargo Bank, N.A., No. 2017-CI-12897, the former Branch Manager accuses the bank of imposing stringent sales quotas starting in 2011. Ms. DeBoy complained about the unethical sales tactics. She said these sales tactics harmed customers. She complained to managers, Human Resources and to the Ethics phone line. She received no response. But, her better sales persons were fired or transferred. She was set up to fail, she alleges.

She went out on maternity leave and was replaced by a temporary manager who reinforced the bank’s unethical sales practices. Then, upon her return to work, she received a poor job evaluation with no warning and no job coaching.She had formerly been a stellar employee.

She resigned to avid a termination. Her replacement received a raise and a promotion. I previously wrote about the first lawsuit by Alex Leal against Wells Fargo here. Lawsuits based on “wrongful termination” in Texas will not go far. There is no such cause pf action in Texas. Her other causes of action are perhaps problematic. The Plaintiff alleges she was denied bonuses and raises due to the unethical practices. But, given the bad publicity about Wells Fargo and its shady practices, she may succeed. See San Antonio Express News report here.

The Texas Whistleblower Law has many limitations. One of those limits includes the requirement that the whistleblower must report the alleged violation of law to a law enforcement authority. For most laws, the local police force would be the appropriate authority. But, what about those many obscure white collar type crimes? We see one such violation in Office of the Attorney General v. Weatherspoon, 472 S.W.3d 280 (Tex. 2015). In this case, an Assistant AG, Ginger Weatherspoon says she was asked to submit a false affidavit regarding her dealings with a judge. She reported the unlawful request to her superiors within the Child Support Enforcement Division. She was later fired.

Ms. Weatherspoon filed suit under the Texas Whistleblower Statute. Tex.Govt.C. §554.0035. The OAG moved for a plea to the jurisdiction, which is like a motion for summary judgment. The trial court denied the motion. The Court of Appeals affirmed the denial. The Texas Supreme Court found in favor of the employer and reversed the denial of the plea. The main issue was other she reported the violation to the correct authority. She reported to the chief of her division, which in turn was required to make a report to the Office of Special Investigations. OSI was apparently the correct law enforcement agency. But, the Texas Supreme Court said that was not enough. Since, said the court, the division chief was not vested with authority to speak for the OSI or to conduct her own investigation.

The employee pointed out that if reporting to her division chief does not suffice, then OAG employees have no place to report. Since, they are subject to termination if they contact any law enforcement authority directly. The court essentially replied, “too bad.” The Whistleblower Act protects employees from reprisal, said the court. That should be dissuade employers from reprisal. See decision here.

The problem with that analysis is that the Texas Whistleblower statute is supposed to protect persons from reprisal, not lead them toward reprisal. The Court has taken the unrealistic view that employees should be willing to undergo financial hardship or worse in order to protect Texas citizens from law breakers. No other employer would have such a rule, that contacting law enforcement authorities directly is cause for dismissal. No one should have to risk her/her job to protect the public. The decision does not explain the basis for a rule prohibiting direct contact with any law enforcement agencies. We can only assume it has some nondiscriminatory purpose. But, if it has such a legitimate purpose, OAG employees should not be required to violate internal rules in order to comply with the Texas Whistleblower statute.

Texas has a whistleblower statute. It applies only to government workers. In a recent whistleblower decision, the Fourth Court of Appeals here in San Antonio reversed a grant of summary judgment. In the case of Torres v. City of San Antonio, No. 04-15-00664 (Tex.App. San Antonio 12/7/2016), Lt. Torres worked for the City Fire Department. In 2009, he was assigned to the Arson Division, where he would spend time at the San Antonio Police Department building. As an arson investigator, he had credentials to access a secure area at SAPD. He noticed two former arson investigators using credentials to get into the same secure area. They should have turned in their investigator credentials when they left the Arson Division. So, Lt. Torres mentioned this to his Captain. A few days later, he submitted a report to the Deputy Fire Chief. Believing no action was being taken, a few days later, he submitted a complaint to the City wide Office of Municipal Integrity. OMI investigated and found the two former Arson investigators were indeed retaining their former credentials. Fire Department Chief Hood was aware they were retaining their credentials, but the Chief did not realize that retention violated statute. Changes were made in procedures to keep this from happening again. Lt. Torres left the Arson Division a few months later.

In 2012, Lt. Torres applied to return to the Arson Division. He was turned down in favor of someone less experienced and without the necessary certifications. The persons making the selection included Chief Hood and Torres’ former supervisor, Capt. Casals. Both Hood and Casals said they overlooked Lt. Torres for the position in part because of his prior complaint to OMI. That evidence amounts to a clear violation for he Texas Whistleblower law. Under the statute, a claimant must show: 1) he was a public servant, 2) he made a good faith report of a violation of law by his employer governmental agency, 3) he made the report to an appropriate law enforcement agency, and 4) he suffered retaliation at work for making the report. Yet, the lower court granted summary judgment.

The City presented evidence that Torres made the report not out of good faith belief, but to shield himself from consequences of unilaterally causing the credentials to be cancelled for the two prior former Arson Investigators. Lt. Torres responded with evidence showing that other officers would have made the complaint, and that he only went to OMI after he saw no action was being taken by the Fire Department. The court of appeals found there was genuine issue of material fact regarding whether his report was in good faith. The employer also argued that the plaintiff did not show his being turned down for the position was related to his report to OMI.

The City showed several reasons why Lt. Torres was not selected, other than his prior whistleblower complaint. But, said the Fourth Court, the plaintiff is not required to show his reporting the credentials issue was the sole reason for being passed over. Instead, the employee need only show that but for the report, he would not have been turned down. That is, the employee need only show the report played some role, however small in the action taken against him. The issue should be resolved by a jury, said the court. See the decision here.

Many employees find themselves in a real quandary when the employer asks them to commit an illegal or unethical act. Texas law protects a worker who is asked to break a criminal statute. But, some employees become so vexed about their situation that s/he goes to the media. That is what happened in Peine v. HIT Services L.P., 479 S.W.3d 445, 2015 WL 6490290 (Tex.App. Hou. 2015). Joseph Peine was a CPA working as a CFO for HIT Services, a heavy turbine business group. According to Peine’s evidence, the company was in financial trouble. It had a history of inflating earnings in the past. He was hired to help turn things around, he alleged. This concerns a motion for summary judgment, so Mr. Peine’s allegations should be assumed as correct. The CFO alleged he was asked to inflate earnings for the year. He was told to claim a project had been completed, when it had not been completed. Mr. Peine refused. His boss, Durg Kumar threatened him and others in the CFO office if the CFO did not follow orders. He said he would “clean house” if the CFO did not comply with his order.

Mr. Peine went around Kumar to talk to higher-ups. Mr. Kumar went around Peine to get things included in the quarterly financial statement. The parent company placed Mr. Peine on leave with pay while it investigated claims made about him. About the same time, Mr. Peine contacted a Thomson Reuters reporter and provided documents. He suggested they wait to see if HIT would fix the problems before going forward with any news report. Soon, the company investigation uncovered the email from Peine to the reporter. The investigator, an in-house attorney, recommended that Mr. Peine be fired for violating the company’s confidentiality policy. Within a couple of months of his initial complaint to the parent company, Mr. Peine was fired.

The CFO filed a lawsuit based on Sabine Pilot Services, Inc. v. Hauck, 687 S.W.2d 733 (Tex.1985). Sabine Pilot is that rare case of judge-made law. That decision recognized an action to sue for a termination resulting from a worker’s refusal to follow an illegal order. The employer moved for traditional summary judgment alleging that Mr. Peine violated the confidentiality policy. The employee responded that there was a genuine issue of fact regarding why he was fired. The court of appeals discussed the standard of proof for a Sabine Pilot case. Sabine Pilot actions require a showing that the “sole cause” of the termination was the order to commit an illegal act. The Plaintiff pointed to statement by Kumar that he would “clean house” if the CFO did not do as he wished and a statement by the parent company that Mr. Peine was a “liability.” Those statements represent direct evidence, said the plaintiff. But, the court of appeals did not accept these statements as direct evidence. The court found they were circumstantial evidence, since there was no indication the persons making those statements had a direct role in Mr. Peine’s termination.

The court did not seem to be aware that in acknowledging the possibility of two different motivations, it was implicitly agreeing that that a jury should decide this issue, not a judge. If there is more than one possible interpretation of the evidence, then under the rules, the decision belongs to the jury, not a judge. But, this irony does not help the plaintiff. Since, few, perhaps no, plaintiffs will survive an appeal to the Texas Supreme Court.

The Plaintiff also presented an expert witness in the area of government compliance. That expert testified that this was a classic case of retaliation. But, the court was still troubled by the fact that he might have been fired for violating the confidentiality policy. The expert could not speak to that possible motivation. Mr. Peine then argued that he expressed concerns to a public forum and should be protected. But, no, said the court, Texas does not recognize freedom to report illegal activities in a private work place. That is true. The Texas whistle blower law only applies to government employees, not private sector workers.

So, the court affirmed the grant of summary judgment. Based on the decision, it does not appear the plaintiff contested whether he truly violated the confidentiality clause. Some employers claim to have such a policy, but upon closer examination, it turns out they often ignore it. It is also unfortunate he went to a reporter. Otherwise, his case should have been solid. Many employees, faced with an unjust termination, reach out to any possible avenue of protection. People who are facing the end of their financial well-being do desperate things. See decision here.

There are a lot of myths out there about employment law. From time to time, I talk about a few of those myths.

At will
“At will” employment means an employee can be fired for anything.” Texas is an at-will state. An employee can indeed be fired for a lot of things, but not for sex, religion, race, national origin, disability, violation of laws, etc. So, yes, an employer can fire you for wearing a blue tie to work, but not because you are too old. The anti-discrimination statutes provide several exceptions to the at-will doctrine.

Probation period
“Probation periods means an employee can be fired for anything.” Not quite. A probation period means an employe can be fired for anything except sex, religion, race, national origin, disability, violation of laws, etc. See above paragraph.

Copy of file
“Employees have a right to a copy of his/her personnel file.” That depends on whether the employee is public sector or private. I have found no authority in Texas law saying that employees of private businesses can obtain a copy of their personnel file. As a public sector employee, an employe’s rights are governed by the Freedom of Information Act for federal employees and the Open Records Act for state employees. I can find no authority providing that a private sector employee has a right to a copy of his/her personnel file.

Rest breaks
“Employees get periodic breaks during the work day.” I was told as a young warehouseman that we had a right to a 10:00 o’clock break and another at 3:00 pm. The times could vary slightly. Since then, I have looked for the authority for those breaks. There is no such authority. Most likely, that is or was part of the influence of collective bargaining agreements (union agreements). CBA’s do often provide for such breaks. But, for non-union employees, there is no authority for a mid morning break and a mid-afternoon break. There is no state law or regulation on rest breaks or meal breaks. Federal regulations do not require a meal break. But, Federal regulations encourage work places to provide rest breaks, but such breaks are not required. See 29 CFR Sec. 758.18.

Non-compete agreements
Some folks outside and inside Texas believes non-compete agreements are not enforceable in Texas. Yes, they are and have always been enforceable. They became much more enforceable with the decision in Marsh USA Inc. v. Cook, 354 S.W.3d 764 (Tex. 2010). I previously wrote about that decision here.

Free speech
The right to free speech exists only for government workers. There is no general right to free speech in a private workplace. But, there is protection for employees who discuss “terms and conditions” of employment. Those sorts of discussions are protected by the National Labor Relations Act. I discussed those protections here. But, as far as discussing politics, football or cooking, there is no right to discuss whatever a worker wishes in the private workplace.

Whistleblowing
There is no general whistle blower protection in Texas. I think most people think of whistleblowing as reporting wrongdoing to some law enforcement type entity. Employees in the private sector do not have protection against whistleblowing. But, there is a protection from asking employees to violate criminal statutes. This sort of lawsuit is known as a Sabine Pilot type action. I discussed Sabine Pilot actions here. These Sabine Pilot actions only apply to violations of law that involve criminal punishment.

Not Written up before termination
People still ask me or tell me that the employer did not write them up before firing them. Well, employers do not have to do that. Yes, most large employers have nice looking employee manuals which state that employees must be wrritten up before termination. But, these manuals are not binding. They have not even been arguanbly binding since about the early 1990’s. This is one employment myth that may never go away. I wrote about employee manuals here.

Privacy
Some folks still think they have some degree of privacy at work. Email is a frequent issue. Generally, email produced with use of the employer’s equipment and server belongs to the employer. The employer may review your email anytime. I wrote about workplace email here and here. The one exception appears to be when the employee accesses his/her private email server which is password protected.

There is no prohibition on private sector employers searching desks to my knowledge. But, the U.S. Constitution Bill of Rights applies to state governments. So, in the public sector, a worker has some protection from unreasonable searches if s/he has a reasonable expectation of privacy” that society is prepared to recognize as reasonable. See O’Connor v. Ortega, 480 U.S. 709 (1987), on remand, Ortega v. O’Connor, 817 F.2d 1408 (9th Cir. 1987). But, the “expectation of privacy” can be limited by office practices and by legitimate regulation. And, HIPAA does protect medical information in most work situations.

So, as I tell folks on occasion, if you want fairness at work, then form a union. Or, persuade your state legislature to make a few changes in the law, so all workers will benefit.

The City of San Antonio runs the city’s airport. But, the Airport has its own police department. Until 2009, the airport police department was separate from the San Antonio Police Department. Airport Police Officer Russell Martin complained about Sgt. Orlandop Battles’ time entries. In 2008, Officer Martin, a veteran of some 30 plus years in law enforcement, said Sgt. Battles was recording his time inaccurately. Four days after his complaint, Officer Martin was assigned to work with Sgt. Battles. A remarkable coincidence.

Officer Martin asked to not work with Sgt. Battles. He said working with him would result in "fiscticuffs or shooting." The officer explained later that he meant the statement as a shock statement to get his supervisor’s attention, not as a threat. The pairing was changed. He would not work with Sgt. Battles. Six months later, having forgotten about the statement, Officer Martin was told he would be terminated for making threats. As a city employee, Officer Martin appealed the decision to a semi-independent board, the city’s civil commission. The commission found in favor of the veteran officer, by a vote of 2-1. But, the City Manager, Sheryl Sculley, overruled the commission’s finding. She upheld the termination. Officer Martin filed suit in state district court.

A year and a half later, he amended his petition to add a federal claim based on 42 U.S.C. §1983. Sec. 1983 requires that states and local governments provide basic procedural due process when terminating public employees. The Plaintiff argued that when the City Manager overturned the civil commission’s finding, she did so without affording him a hearing. She made a paper decision. She did not first conduct her own hearing before reaching her decision. .

Some four years after filing suit, the parties have now reached a settlement. Gilbert Garcia, a San Antonio Express news columinst says it is the largest settlement by the city in recent memory, $225,000. All because the City Manager ignored the recommendation of her own commission. And, all because the airport police could not accept one veteran officer making fairly routine complaints about a co-worker. See San Antonio Express News report here (requires an account).

According to the court’s file, the settlement was actually reached in late July. It took some three months for the San Antonio City Council to finally address the settlement. The City Council will vote on the settlement the week of Oct. 1. Settling with public entities takes longer, but the plaintiff does not need to fear the public entity will declare bankruptcy. Mostly anyway….

In a recent opinion, the Texas Supreme Court clarified one key aspect of whistle blower complaints. The Texas Whistleblower statute applies to government employees only. See Tex. Govt.C. Sec. 554.001, et seq. The statute protects an employee who reports a possible violation of law. The report or question must be to an "appropriate law enforcement authority." Tex. Govt. C. Sec. 554.002. Some court decisions have allowed reports to the employer in certain situations, such as if the employer has an office that is responsible for internal enforcement of the law in question.

But, now, according to the Texas Supreme Court, "appropriate law enforcement authority" means the entity that actually "promulgates regulations" or "enforces" the law in question or "pursues criminal violations." In Texas A&MKingsville v. Moreno, the employee reported a violation of the law regarding tuition waivers to the President of the University, and to the Texas Higher Education Coordinating Board. Her supervisor, Dr. Saban, was claiming a tuition waiver for his daughter, to which he was not entitled. Dr. Saban became angry, and accused Ms. Moreno of butting into his personal business. But, the school required the supervisor to pay back the school the amount of the discounted tuition. TAMU-K essentially agreed with Ms. Moreno.

Twenty-one days later, Dr. Saban personally terminated Ms. Moreno. She filed suit. The employer moved for summary judgment, which was granted. On appeal, the summary judgment was reversed. TAMU-K appealed.

The president has the authority to enforce the law within the university, noted the Supreme Court. The Supreme Court addressed her report to the HECB in a footnote. In that footnote, the Court found that Ms. Moreno did not report a violation of law. She merely asked questions about whether what Dr. Saban was doing satisfied the requirements of the tuition waiver law. According to the Supreme Court, she did not mention the name of Dr. Saban or otherwise indicate her supervisor was violating the law. Yet, in her brief, the employee said the opposite, that she reported Dr. Saban’s apparent improper use of tuition waiver to an official with the HECB.

In resolving a motion for summary judgment, the court is supposed to accept the employee’s version of the facts. The Texas Supreme Court seems to have ignored that fundamental principle. See decision here. The Court appears to agree that the HECB would constitute the appropriate law enforcement authority for purposes of tuition waivers.

But, disregarding the non-movant’s version of the facts is a significant error. The employee has evidence that Dr. Saban prevaricated. Dr. Saban claimed that the A&M Chancellor, Mike McKinney, told him to terminate Ms. Moreno. But, Mr. McKinney denied telling him to do so and said he would not do that. Ignoring the non-movant’s version of facts when the employee impeaches the key witness for the employer is an egregious error by the Court. Indeed, to obtain the tuition waver, Dr. Saban completed a form in which he falsely claimed to be teaching more than part-time. He had to know this representation was false when he made it.

On several levels, the Supreme Court committed error in this decision. Worse, these are the sort of errors that should have been apparent to the Court. The Court issued this decision without oral argument, a step usually reserved for cases in which the answer seems apparent. This is not such a case. The facts and the legal issues are complicated. The Court devoted less attention to this suit than it deserved.

The Federal False Claims Act, also known as qui tam lawsuits, have been around since the Civil War. In Fact, the False Claims Act was passed to deal with the many fraudulent government purchases during the Civil War. The Federal government was defrauded many times by contractors during the Civil War. The act allows a person who first reports fraud on the government to receive 30% of any money recovered. The trick, so I am told, is to get the U.S. Attorney to join in the lawsuit. One can expect the U.S. Attorney or the Department of Justice to join only the strongest qui tam lawsuits.

Department of Justice has indeed joined in Floyd Landis’ lawsuit for fraud against Lance Armstrong for defrauding the Postal Service. The suit alleges that Mr. Armstrong defrauded the government when he accepted payments for riding on their cycle team. According to the DOJ Complaint, team officials assured the Postal Service for years that the cycle team was not doping.

The Postal Service paid $40 million to be the sponsor and paid Lance Armstrong $17 million. But, under the False Claims Act, the government and Floyd Landis must also show that the government was harmed. According to the Armstrong response to the lawsuit, the Postal Service gained some $139 million due to the Armstrong brand. The defense cites the Postal Service’s own internal study. See CBS news report.

So, the extent of the harm to the U.S. government could be a problem. But, yes, when you get the US Attorney involved, the lawsuit has truly begun.

Its a quote I appreciated from the first time I heard it: "I come in peace. I didn’t bring artillery. But, I am pleading with you, with tears in my eyes: If you f— with me, I’ll kill you all." Marine Gen. James M. Mattis said this to several Iraqi tribal leaders in 2003 during the violent aftermath of the Iraq invasion. Marine Carl Newman used this quote as a tattoo. Later, working for Union Pacific Railroad, he ran into job problems. Mr. Newman complained about several safety issues at the railroad. He was fired, he alleges in a lawsuit, for whistle-blowing.

But, Union Pacific claims he was fired because the tattoo violates the company’s violence in the workplace policy. The latest issue of Army Times refers to the tattoo to warn soldiers about having too many visible tattoos. I find it unlikely any employer would truly believe a tattoo like that promotes violence in the workplace. But, there is some prejudice among some civilians against Iraq and Afghanistan veterans. Who knows what truly motivates an employer. But, I will will be pulling for former Marine Carl Newman…….